As we end one year and enter another, it's natural to reflect on the past and wonder about the future. In the spirit of the season, here are my predictions for your finances in 2013:
You'll be offered unnecessary credit. Whether you have a low or high FICO score, you'll be offered an increase in your credit limit or a new credit card in 2013. The offer will feature a low 'introductory rate' as an incentive. However, when you read the fine print, you'll find the introductory rate is temporary and you’ll need to consider if it’s the right card for you.
You'll be tempted to buy something expensive that you can't afford. It could take the form of a house, car, boat, jetski, vacation, or major home appliance. You'll probably know that you shouldn't spend the money, but the temptation will be fierce. You may even begin to justify it and think of ways that 'easily “affordable payments” would fit within your paycheck. You'll likely resist the temptation and the desire to own it will subside.
You'll be tempted by advertising. Sometime during, 2013 you'll see advertising for a new product or service. You'll feel that you must own it. Right now. Hopefully you'll decide to wait and then realize that you can easily live without it.
You'll face an unexpected bill. It could be a major appliance, home or auto repair, or an unexpected medical emergency. At that time, you'll be glad that you have a fund for unforeseen expenses.
You'll be inclined to reduce your savings. You've been saving regularly for your retirement and other needs. But during the New Year, you'll be faced with expenses that could easily be handled by temporarily reallocating money that had been going into savings. The temptation to avoid cutting other expenses will seem like an easy, logical, and practical answer. You'll likely choose the tough, but correct road and continue your savings efforts.
You'll be sold a broken promise on a potential purchase. Mad Men have been making big promises for 50 years—we've been believing them that long. At least one potential purchase you make during 2013 will promise to fulfill your desire to be more popular, healthier, wealthier, or wiser. You'll recognize the hype and ignore Madison Avenue's best efforts.
You'll have friends and neighbors who struggle financially. Someone you know will be in serious financial trouble in 2013. They'll come to you for help. You'll do what you can but won't be able to solve their underlying problem.
You'll be offered a 'no brainer' way to make lots of money. Sometime in 2013, a relative, friend, co-worker, or acquaintance will be bragging about how much money they've made. It could be an investment, lottery, or part-time work opportunity. They'll stress the importance of grabbing the opportunity right now. You'll feel uncomfortable about the offer and delay. Despite pressure, you'll decide that it's not for you and save money you would have otherwise lost.
You've probably noticed that most of those predictions don't require any psychic ability. In fact, you already know that most of those events will happen next year. But, just as an athlete visualizes success before the contest, it's helpful to see ourselves overcoming financial challenges in 2013.
Gary Foreman is a former financial planner who founded TheDollarStretcher.com. The site features thousands of articles on how to save your valuable time and money.